So You Want to Save Money?

Happy holidays everyone! Here are some quick tips on saving money:

(1) Eat in more and out less – On average Americans eat four meals each week outside of their home. Here is another shocker; in 2007 an American household’s annual average spending on food at home was $3,465 and $2,668 outside the home according to data provided by the US Census Bureau (2008). That is far too much money spent on dining out. For the average American household these food expenses (inside and outside the home) consume 13% of the annual household income.

(2) Make and take – While you are eating in more, prepare lunch for work before you leave the home. Some doctors have said preparing lunch at home can be beneficial to our health. This is a great way to save money and be healthy with one swift change, awesome!

(3) Shop in order to drop – Some of the services we are accustomed to now have lower priced alternatives. Here is a look at some alternatives: traditional land lines could be replaced with VoIP (Voice Over IP), cell phone rate plans have changed and car insurance is becoming more competitive. Therefore, shop around for some of the essential services. There maybe a better price out there for you without losing the quality of service you are looking for.

(4) Adopt a new policy – When spending money we need to think strategy over impulse and need over desire. In the New Year, you should adapt a new policy. If it doesn’t assist you in generating revenue it is a liability. Place more focus on income producing and family centered activity than desire.

(5) Increase in knowledge - Above all else we each need to increase our financial literacy. The old statement is true – “what you don’t know will harm you”. Read books, financial magazines, listen to financial networks or speak with experts in the financial industry who can assist you with increasing your financial literacy. Financial literacy is more than knowing how to generate revenue!

I hope that these five tips assist you!

New Style for 2010: Be Frugal

The 2008 US Census Bureau income and expense figures reports that the average American household has only $494.37 of discretionary funds left over each month after paying the monthly household expenses These expenses include: housing, utilities, food, transportation, health care, entertainment, personal insurance and payroll taxes. This translates into roughly $16.00 per day per household.

With a budget of $16 per day, it is important that we become frugal in 2010. Otherwise, we will have a major problem. In 2010, find ways to reduce expenses if at all possible. It is no wonder that American families save less than families in Canada and England.

If you were given $16 each day to do with as you please what would you do? This is a definite call for each of us to live below our means.

I Want to Invest But ….

I have had a number of people tell me they want to invest; get back in the real estate game but there is an issue. The issue usually starts out like this “but my credit” or “but the bank”. Unfortunately that is the story for many these days.

My question to those individuals is always who says you have to do it the traditional way? Did you know there are a number of alternative methods of financing for an individual who wants to invest?

There are self-directed IRAs, private equity and joint ventures along with several other alternative methods of investment. Have you tried or heard about any one of them? Please understand that many of these alternative financing methods are not exclusive to real estate but for almost any type of business. If you would like to learn more about alternative financing for real estate send me in an email info@frederickotowles.com.

The New Enron?

Recently the New York Time reported that banks want to move away from GAAP – Generally Accepted Accounting Principles. For years US companies have relied on GAAP as the general rule for financial reporting. GAAP is somewhat a yard stick for the financial condition of US companies. Now the banks are requesting that this be altered a bit to so that they don’t look as bad in adverse financial climates.

Robert H. Herz, the chairman of the Financial Accounting Standards Board said that “consumer spending depends in part on how wealthy people feel”. When I hear talk like this I think, “Isn’t this what Enron did”? Didn’t Enron misrepresent its financials to appear to be a more robust company financially then it really was? But maybe if you ask for governmental assistance to change the rules a bit, it becomes legal.

Herz continued to state that “I (he) support the goal of financial stability and do not believe that accounting standards and financial reporting should be purposefully designed to create instability or pro-cyclical effects.” Again I ask, shouldn’t the financial reporting of a company mirror the financial condition of a company. If the company is sick financially we should say that, instead of potentially making it seem as if the problem does not exist.

Let’s keep an eye on what decisions are made regarding how banks are able to present themselves on paper.

Be Aware: Four Deductions That Could Cost You

There are a few deductions that you want to pay attention to this tax year. With the financial climate the way it currently is, every little bit will count.

Deduction Alert #1 - Out of pocket charitable contributions: Many give cash to charity organizations and never remember it when the tax return is filed. Take some time now to think of the times you gave cash to charities and write the occasions down. It would be great to obtain receipts for these contributions if you can. Also please remember if you used your vehicle for charitable purposes record the mileage. You are able to deduct fourteen cents per charitable mile driven.

Deduction Alert #2 – Education Tax Credit Expanded: You will notice a new credit on your 2009 tax return. Its name is the American Opportunity Credit. This credit will grant a rebate up to $2,500 for each qualifying student in their first four years of college. There are income restrictions for receiving the full credit. These restrictions begin at the modified adjusted gross income for individuals of $80,000 and $160,000 for married couples.

Deduction Alert #3 – Energy-saving home improvements: The purchase of biomass fuel stoves, qualifying skylights, windows, outside doors along with high-efficiency furnaces, water heaters and central air conditioners can also qualify for a tax credit.

Deduction Alert #4 – State Taxes: That’s right, state taxes are deductible in 2009. If you had to pay state taxes this past spring you can be granted a deduction.

Business Anxiety

The term anxiety was birthed from words that mean to think narrow-mindedly and to be taken by the throat. As people who operate within a world with others, it is more than likely that we will feel some level of anxiety in several areas of our lives.

Here are a few anxiety triggers that can be experienced in business, regardless of the size of the organization:

Money – businesses always have an issue with money. CFO’s are always looking to reduce spending in order to increase the bottom line, while COO’s and CFO’s are seeking new ground to increase the revenue of the organization. As long as there is a business, there will be some level of anxiety created by money.

Leadership – in a day where people are changing, becoming less tolerant, more independent and less loyal; leadership is always going to be challenged. As a leader you have to improve on your leadership ability – the ability to deal with competitors, new thoughts, economic changes and the ability to deal with a variety of people inside and outside your organization. Maybe the best leadership move you can make is to appoint another leader to assist in dealing with some of these changing elements.

Growth – determining what stage your business is currently in, knowing where it is going and being able to discern when it is time to make a move in advance for the purposes of growth. I know some entrepreneurs who worked from their home office. However, in order for their business to expand they moved into an office building. Making the right move at the right time to be just ahead of your firm’s growth rate can cause anxiety.

Staff Conflict – pleasing people isn’t easy. Coming to an amicable resolution isn’t always the easiest thing to do either. Internal conflict caused the Roman Empire to collapse and it will certainly do the same thing to a business.

Retention – the Internet has created instant competition to almost every business. Consumers that are seeking more service for less cost can make them a bit disloyal. What do you do to retain clients? This can be a big source of anxiety for most small business owners.

Ideas – most entrepreneurs are flooded with a ton of ideas that seem profitable. This is both a gift to many as well as a curse. What ideas are indeed profitable? Which of those ideas are to be acted on now? Which ideas are to be executed at a later time?

These are just a few business anxiety triggers, you may have more. My suggestion here is to develop a resource or mastermind team to assist you in resolving some of these areas of anxiety. The key to handling these anxieties is never to be reactive or defensive. In cases of anxiety practice being responsive, responsible, be thoughtful and think about the “Big Picture.” Learn to manage those anxieties by developing a better you.

Your Financial Score Card

Reminisce back to exactly one year ago from today. At that exact moment, how much money did you have in the bank? What did your investment portfolio look like? Did it seem easy or difficult to meet your monthly financial obligations? Where you more determined to make financial improvements back then or not? What were some of your sort term goals? How many of them have you reached?

I would dare to say that many people walk around frustrated about their financial score cards. However, if we answer these questions truthfully, many of us are not worried that we haven’t improved financially. We are more worried that we didn’t follow the financial plans that we committed to at this time last year.

Today, I challenge you to sit down with your spouse or close friend and make some financial commitments today. Maybe the commitment will be to save at least 5% of your earnings. That commitment could be to stay on budget throughout 2010. Another commitment could be to constructively use your time. Be determined to not have any of your time wasted. Instead, use that time to earn additional income. Everyone’s commitment maybe different but it is definitely needed. Make your commitment today and stick to it tomorrow.